Myanmar Opening to Foreigners Draws Best Western Hotels

By Nichola Saminather -
Feb 4, 2013

Best Western International Inc., the
world’s second-largest closely held hotel chain, will open its
first Myanmar property in 2013, taking advantage of friendlier
investment rules and a shortage of rooms in the country.

The Phoenix-based group is considering locations including
Yangon and Mandalay, the nation’s two largest cities, for the
hotel, Glenn de Souza, Bangkok-based vice president of
international operations for Asia and the Middle East, said in
an e-mailed response to questions on Jan. 31.

Myanmar’s President Thein Sein is seeking to transform the
Southeast Asian nation into a democracy and modernize its
financial and private infrastructure after five decades of
isolation. He signed a foreign investment bill in November that
cleared the way for multinationals to spend more in the formerly
military-run nation.

“There are huge opportunities in the country, following
new investment regulations,” de Souza said. “The hotel sector
is severely under-supplied, especially in the mid-scale segment,
so there will be big opportunities for first movers.”

International visitor arrivals to Myanmar, excluding border
crossings, more than tripled to 593,381 in 2012 from 2008,
figures from the nation’s ministry of hotels and tourism show.
The total number of hotels in the country climbed 27 percent to
787 in the same time, the data shows.

Room Shortage

Yangon will see a “major shortage” of hotel rooms for the
next five to 10 years, as visitor arrivals outpace the supply of
hotels, Andrew Langdon, Bangkok-based senior vice president at
Jones Lang LaSalle Hotels, said in a telephone interview.

The average daily room rate surged more than 350 percent to
$130 for four- and five-star hotels in 2012 from 2008, and will
climb as much as 25 percent this year, he said.

The government is planning a new 200-acre hotel zone in
Yangon to boost the supply of hotels as the nation prepares to
host the 27th Southeast Asian Games in December, Xinhua news
agency reported last month.

“Myanmar’s becoming the next hot place for the adventurous
international guest,” Langdon said. “International hotel
groups are just now going through the learning phase, learning
about the market, its opportunities and risks.”

Myanmar’s president has said he will start a political
dialogue with 10 of the 30 ethnic minority groups that have
resisted central government control since the nation gained
independence from Britain in 1948. A proposed cease fire by the
Kachin Independence Organization, one of the groups, could lead
to a resumption of peace talks, the government said on Feb. 1.

Investor Discussions

Best Western, which manages more than 4,000 properties
worldwide, has been discussing franchising and ownership options
of the hotels in Myanmar with potential investors, said de Souza,
declining to provide further details. The group will decide on
the brand -- Best Western, Best Western Plus, or Best Western
Premier -- depending on the suitability for the location chosen,
he said.

Eight overseas airlines have begun services in Myanmar, and
existing ones have increased offerings, raising international
capacity by 64 percent since April, according to figures from
industry consultant CAPA Centre for Aviation last month.
Domestic services will also grow as carriers seek to cater to
growing demand within the country, and Golden Myanmar Airlines,
the nation’s first low-cost carrier, begins operations, the
group said.

Asian discount airlines will add about 750 new airplanes,
worth about $47 billion, over the next decade as they bet on
surging travel demand in the region. Asia will account for a
third of global passengers in 2016, according to the
International Air Transport Association.

Across Asia, Best Western plans to open about 55 hotels by
the second quarter of 2015, de Souza said. In Southeast Asia,
Indonesia and Thailand will have the most number of rooms, he
said.

Asia Expansion

In Indonesia, which is driven by domestic demand, the focus
will be on mid-market offerings. The group will open 15 hotels
by January 2015 in emerging cities including Semarang, Samarinda
and Benjamasin, as well as the capital Jakarta and the resort
island of Bali, he said.

While major Thai cities such as the capital Bangkok and the
beach-resort island of Phuket have seen a large number of new
hotels opening, Best Western still expects opportunities in the
“mid-scale sector,” de Souza said. The company plans to open
seven hotels by the first quarter of 2015 in Thailand, he said.

The group remains wary about challenges including rising
supply of hotels in many “gateway cities” in Southeast Asia,
floods and political risks that drive down rates, de Souza said.

Still, “Southeast Asia is undoubtedly one of the world’s
most attractive hotel markets right now,” de Souza said. “The
region’s tourism sector is buoyant, with inbound arrivals seeing
double-digit growth in 2012.”